Thursday, June 24, 2010

Market outlook: June 24th with Updates

This morning's economic data has been reported. First, May Durable Goods orders were down -1.1% for May. It was up over 3% in April. This is the first month it has been down in 9 months. Then Jobless Claims were reported down to 457,000 from 476,000, a drop of only 19,000 claims. But that could be because Congress did not pass extending Unemployment benefits for the long term unemployed. So I wouldn't be feeling better over the smaller number quite yet. Of course they haven;t mentioned that in the numbers or the media because they don't want you to be feeling anything but good right now. It's called manipulation. Have you ever asked yourself this, If the economy is truly doing better wouldn't we be feeling that and there wouldn't be a need to manipulate us? Hmmmmm.

Moving on, Futures are pointing to a lower opening. The Dow is down about 35 points, the Nasdaq is down about 14 points, so we shall see how this day unfolds together.

The chart patterns for the Dow, S&P, Nasdaq and Russell, according to ElliottWave Forecast web site, shows Bearish outlook for the Short term (Weeks to a Month), Medium term (1 to 6 months) and Long term (6 Months to a year). This is the first time all three periods have been Bearish.

Remember those Support levels going into today. For the Dow, that shows S1 at 10,227 and S2 at 10,157. Yesterday's close was 10,298. On the upside, R1 Resistance is at 10,368 and R2 is at 10,438. I don't see us going back this high, I am more concerned about breaking below the Support levels for those still holding stocks in hopes of a turnaround. For the Russell 2000 Index, S1 is at 637 and S2 is at 631. This Index closed yesterday at 644.

Those holding Put Options on stocks or Indexes can relax right now, as when the market drops, they make money. Same is true for my TZA Call Options, as they should rise with the Russell 2000 dropping, because they are based upon this Triple ETF Ultra Short. In pre-market, TZA is up 3% with the Russell Index Futures down.

Update: 8:00am PST

As you can see from the Intraday chart above, the Dow has dropped about 110 points so far this morning. As I say that, I can see the W pattern being formed and most certainly this next leg down will go below these low levels. Watch S2 support level for the Dow as that would take us down 150 or more points in total.

Update: 12:15pm PST.

We went below S2 on the Dow and are now down about 152 points at 10,140. We still have 45 minutes to go but I believe we are going even lower in the remaining time. I do not want the market to close at the bottom today so hopeful;y it won't as it would form a Hammer pattern and that would indicate a reversal is coming and the market would go up. However, it would be inconsistent with the news out there for the market to rise. It needs to go down and we all know it, the quicker the better. As you can see there is a very steep "W" pattern pointing almost straight down to contend with here. We have now hit a new low today of 10,132.

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